Kentucky Utilities obtains $198.31 million letter-of-credit agreement

By Tali Rackner

Norfolk, Va., Oct. 2 – Kentucky Utilities Corp. entered into a $198,309,583 three-year letter-of-credit agreement on Wednesday with Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent and initial issuing lender, according to an 8-K filing with the Securities and Exchange Commission.

The new agreement replaces a previous amended and restated letter-of-credit agreement dated Aug. 16, 2012.

The credit agreement allows for Kentucky Utilities to request lenders to issue letters of credit to support its issuances of tax-exempt pollution control bonds and to request loans in connection with certain repayment events for the letters of credit. It currently uses the full capacity of the agreement for issuance of letters of credit to support four existing series of pollution control bonds, the filing said.

There is a market-based facility fee based on the company’s senior secured long-term debt rating, as well as customary letter-of-credit issuance fees.

The credit agreement contains a financial covenant requiring Kentucky Utilities’ consolidated debt to total capitalization to not exceed 70%, and other customary covenants.

The electric utility is based in Lexington, Ky.

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